A slew of tax incentives offered by the government, coupled with robust demand have made India the market leader in the small car segment The auto industry in India is all set to scale greater heights with the country emerging as the market front-runner in compact car segment. Owing to robust demand as well as government tax incentives for small car production, India has attracted big players such as Ford, Nissan, Volkswagen and Shanghai Automotive Industries Corporation, among others to splurge millions in the compact car segment, thereby transforming itself as a major hub for small car manufacturing.
Drop in sales in the Western markets has forced global car giants to shift their focus to the Indian auto market, which despite the global economic recession has remained resilient. Low manufacturing cost in India is another factor that has played a critical role in shifting attention of these companies towards the Indian market.
“Ratan Tata’s Nano, the world’s cheapest compact car, has played a major role in bolstering the small car segment of the country. Nano’s success shifted the focus of major auto makers towards the compact car segment, thereby making India a market leader in the said segment. More than half of the cars sold in the country belong to the compact car segment,” says Ram Saran Alwadi, proprietor of Vikash Automobiles, a mid-sized manufacturer of bike silencers in New Delhi.
Preference for small cars
Experts believe that unlike developed nations where consumers prefer big luxury cars, people in India prefer small cars because of several advantages. First and foremost is the price factor. Compact cars costs less than big cars, which make them affordable for people belonging to the middle income group. Secondly, since compact cars weigh much less they offer better mileage as compared to big cars, thereby making them more fuel-efficient.
 “Indian roads boast of abysmal traffic conditions. Most of the roads have sharp curves and suffer from traffic congestion, which makes car manoeuvrability difficult. Compact cars are easily manoeuvrable and helps one to navigate through the curves easily,” says Nikhil R Parikh, proprietor of Bonus Plastics Private Limited, a mid-sized manufacturer of car seat belts in Ahmedabad.
New compact cars to hit Indian roads
Indian compact car segment is further poised to grow with several new launches scheduled for 2010. German auto giant, Volkswagen will unveil its compact car Polo in Auto Expo 2010, which is set to hit the Indian roads by March 2010. General Motors will also unveil its compact car Chevrolet Beat in the event. Toyota plans to launch its compact car in the country by December 2010. The year will also witness American car giant Ford rolling out its compact car Figo. Nissan too plans to bring out its compact car in May 2010.
Flipsides of compact car segment in India
There are certain flipsides that might hinder the progress of the compact car segment in India. The most important of them being labour unrest, which results in strikes and deadlocks. Recently, the Gurgaon-Manesar belt, a leading auto manufacturing hub in India, witnessed labour unrest that not only resulted in loss of revenues but also severely affected delivery schedule of auto manufacturers. Besides, India also needs to improve upon its infrastructure to entice more foreign firms to invest in the Indian compact car segment. Arup Choudhury |
